Romney's Middle-Class Tax Sale

How the Republican can win the debate he's now losing by default.

Updated Oct. 4, 2012 12:01 a.m. ET

In this peculiar election year, President Obama is pulling off the small miracle—no, make that the kind of thing that happens in Lourdes—of winning the tax debate. This should be impossible, and Mitt Romney has to turn that around if he wants to win.

Despite a tax platform that is a Walter Mondale replay, polls show that Mr. Obama has sanded off the traditional GOP tax edge and the lead Mr. Romney held as recently as late summer. An ABC-Washington Post poll gives Mr. Obama a 49%-44% advantage on taxes, with Mr. Romney's credibility slipping from 48% in August, and Mr. Obama's surging from 43%. The same poll has 57% of registered voters saying Mr. Romney would do more to favor the wealthy than the middle class and merely 35% believing the opposite.

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Human Events columnist David Harsanyi on what Mitt Romney needs to do and say in tomorrow night's debate. Photo: Getty Images

The main cause of this role reversal is that Mr. Obama has driven a relentless tax message—albeit a wildly deceptive one: That Mr. Romney is a sleeper agent who wants to raise taxes on middle-class families by $2,000 to finance tax cuts for him and his fellow tycoons. Mr. Obama invokes this putative secret plot at every rally, and so does every surrogate down to dogcatcher, plus his TV commercials.

As a factual matter, the claim is as bogus as any in years because Mr. Romney has proposed no such thing. The claim hangs on an August 1 report by the liberal Tax Policy Center that even its authors have since admitted was merely "stylized."

The outfit's gnomes concluded that Mr. Romney's actual reform proposal—cutting rates across the board by 20%, combined with closing loopholes at the higher end—was "mathematically impossible." They then imagined multiple details for a "Romney" tax plan that existed only in their own minds and that would raise taxes among the lower brackets by $86 billion.

In a recent paper, Alex Brill of the American Enterprise Institute pointed out errors that—by the Tax Policy Center's own reasoning—would take that figure down to $41 billion, then to $12 billion, then to a net tax cut. Numerous other critiques have forced the Tax Policy Center to walk back its assumptions or disavow them entirely or change the subject, even if the Obama campaign continues to quote them and the press corps plays dumb.

Amid this barrage, Mr. Romney has also played dumb, as in silent. Only this week has Boston rolled out a response ad to Mr. Obama's middle-class tax hike TV buy, which ran unanswered for a month in a half-dozen swing states.

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Associated Press

The new Romney ad throws back the charge, noting that Democrats have already raised taxes on the middle class through ObamaCare's 18 separate tax hikes totaling some $836.3 billion over the next decade. He ought to throw in the individual mandate to buy insurance that Chief Justice John Roberts explicitly called a "tax" in order to hold it constitutional.

This is modest progress, but Mr. Romney's larger failing is that he hasn't even tried to sell his own proposals, much less their broader pro-growth, practical and moral foundations. Sometimes he's added to the public confusion, such as his defensive concession in Ohio a few days ago that voters shouldn't "be expecting a huge cut in taxes, because I'm also going to lower deductions and exemptions."

A better argument would begin by explaining how lower rates and a more efficient tax code—simpler, stabler, more transparent—would increase economic growth that would raise incomes for everyone. According to the Census Bureau, U.S. median income has fallen by 4.1% since the recession ended three years ago. Simply increasing after-tax take-home pay would help, but so would improving the incentives to work, save, invest and create jobs.

To refute Mr. Obama's class-warfare obsession, Mr. Romney could also point out that there aren't a lot of taxpayers like Mitt Romney out there, he of the $1,935,708 tax bill in 2011. Only about 13% of taxpayers earn more than $100,000. The total annual after-tax income of all millionaires and billionaires today is about $709 billion, according to IRS data.

What this means is that even if he increased tax rates on the rich to 100%, Mr. Obama would still have to find more revenue to pay for his spending ambitions. This means he's inescapably going to have to tee up the middle class for a tax wallop unlike anything in U.S. history. Mr. Romney should say that, having taken federal spending to a quarter of GDP, a second Obama Administration would make a European-style value-added tax, carbon tax or another money maker inevitable.

As for "fairness," Mr. Romney could point out that high tax rates inevitably lead Congress to pass loopholes that the wealthiest are best able to exploit. Middle-class Americans can't afford lobbyists on Capitol Hill, but Mr. Obama's rich friends at Solyndra and Goldman Sachs can. Tax reform will improve growth and fairness, which is what happened after Ronald Reagan and Democrats in Congress united to pass reform in 1986.

So far this year's tax debate features one candidate with no credible plan running against a fake plan that his allies made up and another candidate with an admirable plan that for some reason he doesn't want to talk about. Mr. Obama is winning by default, but that doesn't mean Mr. Romney can't execute one of those turnarounds he's famous for, if he tries.

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